Amazon employs thousands of people at each of its fulfillment centers. The e-commerce giant recently leased 922,043 square feet at 2 Brick Yard Road in Cranbury. — Courtesy: Amazon
By Joshua Burd
Industrial space continues to be a winning bet for New Jersey developers, as tenants preleased some 3.5 million square feet of speculative buildings that were delivered in the second quarter.
That’s according to research from Colliers International Group Inc., which found that preleasing of spec warehouse and distribution centers accounted for more than half of all Q2 leasing activity in northern and central New Jersey. E-commerce users drove the demand, with Amazon leading the way with its 922,043-square-foot commitment at 2 Brick Yard Road in Cranbury.
Such activity continued to push rents upward during the quarter in the industrial sector, Colliers found. Rents in central New Jersey, which saw 4.7 million square feet of absorption in Q2, rose 18.3 percent year over year to finish the second quarter at $6.47 per square foot.
Other deals in Central Jersey included DMG’s 607,739-square-foot lease at 1242 Cranbury South River Road and Cascade’s 451,800-square-foot transaction at 2 Turner Place in Piscataway, Colliers said. All told, the firm found that the Exit 8A and Exit 10 submarkets along the New Jersey Turnpike accounted for 72 percent of the 6.8 million square feet leased in the quarter.
The Amazon location in Cranbury, which was developed by Clarion Partners, was one of three new fulfillment centers announced by the e-commerce giant in April. The company has also committed to new facilities in Edison and Logan Township, part of its ever-growing footprint in New Jersey.
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Northern New Jersey also saw positive activity. Colliers said the region recorded 1.3 million square feet of net absorption during Q2, part of 23 million square feet of absorption in the past three years that has pushed the availability rate down to 7.2 percent from 12.1 percent.
“As e-commerce grows, occupiers continue to demand warehouse space in the last mile of their distribution chain,” said John Obeid, senior director of tristate suburban research for Colliers. “As a result, market fundamentals in northern New Jersey continue to post record improvement in every statistical category, with average asking rent, availability rate and construction activity currently at historical levels.”
All told, developers in northern and central New Jersey delivered 3.7 million square feet of spec industrial buildings during Q2. Tenants had preleased all but 200,000 square feet of that space.
